Abstract

The 21st century is marked by power shifting from the west to the east. This century started a new debate in the world about the peaceful rise of China as an economic power. Many scholarly articles discuss China as a new superpower. Due to the peaceful rise of China, the major powers like USA and Russia are looking for new areas of cooperation with China. This cooperation proved the statement that “there are not permanent friends or foes in international relations, only interests are permanent” and these national interests help the states to make their foreign policy. This is true in the relationship among states as well in the case of China & Pakistan.  Despite, strong defense and diplomatic relations, there are some areas of divergence in Pak-China relations which are seen with the help of primary and secondary sources. This aspect needs to addressed by the leadership of both states.

Key Words

Strategic Ties, Pak- China Trade, Challenges, Opportunities, USA, Russia

Introduction

“Trade is an activity of strategic importance in the development process of a developing economy”. Through foreign trade, a country can achieve quick economic development. In the modern world, the economy of world has become open, but it is varies from country to country. No doubt that trade is important for international transformation of commodities, technology etc. who provides welfare in two ways (Vijayasri, 2013). Trade provide the positive influence on the economic growth of the country.

An Overview on China-Pakistan Trade Relation

Pakistan recognized communist country China in 1950. Due to the need of Security

Pakistan recognized communist country China in 1950. Due to the need of Security umbrella because of the threat from India, Pakistan joined anti-communist bloc, but China never criticized Pakistan's stance as she knew the circumstances. In 1954, at the conference of Colombo, Prime Minister Muhammad Ali Bogra declared communism as the ''biggest potential danger to democracy in the region'' China got hurt by this statement because china regarded Pakistan as a friend (Sattar, 2010). At Afro-Asia Summit Conference, in 1955, M A Bogra in a meeting with Zhou Enlai, cleared her membership in SEATO, and also that they are not against of communist China.

Table 1. Bilateral Trade 1950-59 (USD Million)

Years	Exports	Imports
1950	--	--
1951	--	--
1952	83.8	2.2
1953	7.2	3.3
1954	26.1	1.0
1955	31.7	0.2
1956	15.9	7.8
1957	9.5	10.3
1958	7.6	4.4
1959	0.7	4.0

Source: Malik, A. R. (2017)

From 1960-69, a new triangle of India with US and Soviet Union was developed. And on the other hand, US air and naval showcase near the Chinese seaboard and separatist element in Tibet backed by India, forced two countries drew closer.  In 1962 China-Pakistan Boundary Agreement established deeper link between them. This phase considered as a changing strategic environment because of the India-China border conflict and war between India-Pakistan in 1965. It also witnessed the US shifted policy from Pakistan to India.

Table 2. Bilateral Trade: 1960-69 (USD Million)

Years	Exports	Imports
1960	14.8	3.5
1961	10.2	4.2
1962	1.6	5.9
1963	12.8	16.3
1964	40.3	18.5
1965	43.3	28.3
1966	43.3	33.7
1967	31.1	29.3
1968	25.5	26.3
1969	29.0	27.7

Source: Malik, A. R (2017)

“During 1970-1979, bilateral trade increased from USD 73.4 Million in 1970 to US$ 192.8 Million by 1979.” (Malik, 2017). China's export to Pakistan increased but the nationalization process of many industries in Pakistan fluctuated Pakistan's export to China.

Table 3. Bilateral Trade: 1970-79 (USD Million)

Years	Exports	Imports
1970	39.2	34.2
1971	30.1	24.0
1972	17.5	48.2
1973	13.1	54.3
1974	11.3	53.7
1975	13.5	64.1
1976	17.0	54.3
1977	17.4	83.4
1978	30.7	123.2
1979	25.0	157.8

Source: Malik, A. R. (2017)

“From the next year Chinese export to Pakistan increased with the total sum of USD707.4 Million comparatively high from the last decade. In 1979 Soviet invaded in Afghanistan and influx of Afghan refugees affected the economy of Pakistan. There was a sharp decrease of Pakistan’s exports from 1984 onward to 1988. They temporarily export increased to USD169.4 million in 1989. China also maintained an upward trend of its exports to Pakistan right after 1985 when its exports rose from USD162 million to as high as USD337.5 million by 1989” (Malik, 2017).

“By the beginning of 1990, bilateral trade stood at USD424.6 million and gradually increased to USD716.8 million by 1999. There was a slow increase and Pakistan’s exports reached USD179 million. Similarly, China’s exports to Pakistan also incrementally increased and recorded USD537.8 million in 1999” (Malik, 2017).

China Pakistan Bilateral Trade: 1989-1999(US$ Million)



Source : Pakistan's export to China and Pakistan's import from China

From the beginning of 21st century, number of agreements like Early Harvest Program (2005) to reduce tariff, preferential trade and Free Trade Agreement FTA was signed between China and Pakistan for trade cooperation.

FTA provided the increased bound in Pakistan's export to China and the total bilateral trade reached at the volume of US$8,608 Million in the end of 2009.

Table 5. China's Value of Import and Export of origin destination with India and Pakistan (USD Million)

Country	2015		2014		2013
	Import	Export	Import	Export	Import	Export
India	1336.855	5822.803	1635.869	5421.742	1697.025	4843.241
Pakistan	247.476	1644.189	275.387	1324.448	319.684	1101.96

Source: NBS of China

Table 6. Value of Import and Export (USD Million)

Country	2012		2011		2010
	Import	Export	Import	Export	Import	Export
India	1079.582	4767.751	2337.115	5053.709	2084.625	4091.494
Pakistan	313.825	927.539	211.862	843.971	173.102	693.76

Source: NBS of China

Table 7. Value of Import and Export (USD Million)

Country	2009		2008		2007
	Import	Export	Import	Export	Import	Export
India	2965.604	137.278	3158.538	2025.889	2401.146	1461.71
Pakistan	552.833	126.001	605.107	100.68	578.905	110.422

Source: NBS of China

Table.8 Value of Import and Export (USD Million)

Country	2006		2005		2004
	Import	Export	Import	Export	Import	Export
India	1458.13	1027.745	893.428	976.622	593.601	767.803
Pakistan	423.937	100.721	342.766	83.317	246.579	59.475

Source: NBS of China

Table 9. Value of Import and Export (USD Million)

Country	2003		2002		2001
	Import	Export	Import	Export	Import	Export
India	334.323	425.138	227.387	267.116	169.997	189.627
Pakistan	185.499	57.494	55.75	124.211	58.187	81.508

Source: NBS of China

Table 10. Value of Import and Export (USD Million)

Country	2000		1999		1998
	Import	Export	Import	Export	Import	Export
India	135.348	156.073	82.577	116.196	90.573	101.669
Pakistan	49.218	67.932	39	58.061	38.905	52.343

Source: NBS of China

Table 11. Value of Import and Export (USD Million)

Country	1997		1996		1995
	Import	Export	Import	Export	Import	Export
India	89.726	93.373	71.917	68.602	205.202	143.815
Pakistan	37.911	68.923	34.227	62.302	22.287	78.862

Source: NBS of China

Table 12. Value of Import and Export (USD Million)

Country	1994
	Import	Export
India	32.176	57.301
Pakistan	16.194	60.57

Source: NBS of China

 

Pakistan China Relationships after Free Trade Agreement (FTA)

 

FTA is only beneficial to China's exporters. Pakistan's exporters only utilized 3.3 percent of tariff concession given by FTA due to the lack of information about the agreement. Pakistan said that China is not providing concession to Pakistan's exporters as provided the other countries of ASEAN. To address the constraints, several negotiations took place. Since then six meetings have held but failed to develop any result.

In 2015 Pakistan Business Council published a report on the Review of first phase of China Pakistan FTA. In which they showed the incompatible figures of reported trade data between Beijing and Islamabad.  Data reported by Pakistan shows that its trade deficit with china is over $9 billion however, the data reported by China indicates over $14 billion, showing that in 2015 there is nearly $5 billion in trade that is unaccounted for.

Pakistan and China’s trade volume was $4.1billion in the year of 2006-07, which reached at higher in 2012-13 with the value of $9.2 billion after signing FTA. In 2011, on the first meeting of second phase of FTA, both countries had emphasized on tariff reduction. Currently the Pakistan’s export to China reached $2.6 billion and the volume of import was $6.6 billion with bilateral trade deficit of $46billion.

 

Xinjiang and Pakistan

 

The ''All-weather'' friendship faced tension in 1990, when China blamed those Islamic militants who are involved in the separatist movement in Xinjiang; they were trained by Pakistani's Madrasah. At that time China shut down her road links with Pakistan included KKH (Fayaz, 2012). China pressurized to Pakistan for the operation against Muslim groups of Madrasah who supposed to be suspected in Xinjiang's problem.  But Pakistan always denied her support to Uighur separatist and to lessen the Chinese fear, Pakistan has taken many strict measures for example in recent, Pakistan closed two Uighur community centers in 2002 which was the shelter for Uighur immigrants in Pakistan.

The China's Perception

China think that the insurgency in Xinjiang is a cyclic process in which Taliban help the Islamic movement of Uzbekistan and this group further facilitate the Uighur of Xinjiang with the help of Madrasah of Pakistan (Fig 2).



A Recent Wave

In 2011, an attacked by the group of East Turkestan Islamic Movement on civilian at Xinjiang, opened the door of another tension when China blamed that the leader who being arrested after this incident, he had gone Pakistan for training in gun and bomb making (Kronstadt, 2012).  But Pakistan assured China that the Pakistan never allow anyone to use her territory against Pakistan (People’s Daily, 2003).On September 2015, meeting between China's president Xi Jinping and President Mamnoon in the Great Hall of The People China, the President of Pakistan said:

''Almost all members of Uighur militants group, the East Islamic Movement have been eliminated from Pakistan may be if they are there, and should be very few'' (Reuters, 2015).




China-India Relations: A Big Challenge for Pakistan




China and India had started their relations soon after their formation. In 1950, ‘’Hindi Chini Bhia-Bhai’’ was the famous slogan to describe the cherish relations of India and China. In 23rd October 2012, Beijing stressed that ''India and China are ''partners'' instead of ''rivals'' on the 50th anniversary of war (four week war of India and China begun in October 1962) 




Why China needs India?




First , China knows, India being a part of G20 and BRICS, can support its interest on international level because India is, and according to World Bank GDP of India was 2,263,523(Millions of US$) in 2016 (by contrast Pakistan's GDP was 283,660 USDMillion). A strong partner can facilitate the foreign policies objective of other partner at every level. Likewise, the same stance of China-India on Issue of Syria, Russian involvement in Ukraine. 




Peace in the Region




Second, China wants peace as well as constancy in the region for her economic development. The stability in periphery is another factor of China's strategic goals. 




US-India Relation




Third the China's perception about the US policy to contain China. Beijing looks the growing China-Indian relations as the containing policy of USA. That's why China engaging India with economic relations to avoid enhancement of US-India relations (Khokhar, 2011).

India-China Relationships and its Impact on Pakistan




The above-mentioned cooperative factors of China-Indian relations may impose the effect on Pakistan and China time tested friendship. Pakistani observers claim that China will develop her relations with India, and this will affect Pakistan. India is considered a threat for Pakistan’s national security. Therefore, the growing relationship between China and India seems very sensitive for Pakistan. But it is hoped that the relations between China-Pakistan will never be hampered by ongoing China-Indian ties due to the following reasons;

• China is economically raising country and is focusing on her economic development and to fulfill her energy for economic prosperity, China heavily depends upon oil import. China is the second largest oil consumer. According to an estimate, her oil consumption will be double by 2025. ( Khokhar, 2011) .Gawadr in Pakistan, enhance her importance for China. Gawadr is the closest and easiest access to the Persian Gulf and an energy corridor for China.

• Pakistan always provided her diplomatic support to China in every need of hour. In history Pakistan had opened up the US-China diplomatic channel through a secret meeting in 1972. Pakistan. Pakistan has favored the stances of China over Taiwan, Xinjiang and Tibet issues.

• The strategic ties between China and Pakistan is important for China's policy for economically and politically development. The China's initiative of OBOR is the continental connection with Eurasia and based on Silk Road, Economic road, and Maritime Silk Road and CPEC that will enhance China's trade in South Asia, using CPEC; different states of South Asia will develop trade relations with CARs, and CARs will also facilitate their relations with SAARC.

China Pakistan Economic Corridor

21^st century marked as the century of economic development. Global economies inter linking the world through ''economic corridors''. In 2013, China's president proposed Chinese OBOR “One Belt One Road” It is basically the revival of old Silk-Road, which will connect China with 62 countries in 3 continents and also facilitate those countries with economic growth who are the part of OBOR. CPEC China Pakistan Economic Corridor being a part of OBOR provides a new trade corridor for China and Pakistan and will connect China with the markets of Asia, Europe and beyond.

Special Economic Zone SEZ

S	Project	Province	Industry
1	Rashakai Economic Zone , M-1, Nowshera	Khyber-Pakhtunkhwa	Fruit/Food Packaging/Textile Stitching/Knitting
2	China Special Economic Zone Dhabeji	Sindh	To be determined during feasibility stage
3	Bostan Industrial Zone	Baluchistan	Fruit Processing, Agriculture machinery, Pharmaceutical, Motor Bikes Assembly, Chromites, Cooking Oil, Ice and Cold Storage, Electric Appliance, Halal Food Industry
4	Punjab - China Economic Zone, M-2 District Sheikhupura	Punjab	Mix Industry
5	ICT Model Industrial Zone, Islamabad	Islamabad	Feasibility studies yet not be carried out
6	Development of Industrial Park on Pakistan Steel Mills Land at Port Qasim near Karachi	Port Qasim near Karachi	Feasibility studies yet to be carried out
7	Bhimber Industrial Zone	AJK
8	Mohmand Marble City	FATA
9	Moqpondass SEZ Gilgit-Baltistan	Gilgit-Baltistan	Marble/ Granite Iron Ore Processing , Fruit Processing, Steel Industry, Mineral Processing Unit, Leather Industry

Source: cpec.gov.pk

 

Challenges to CPEC

 

CPEC is a game changer project involving an investment of USD 46 billion Dollars. Its beneficial impact is long lasting for Pakistan, but this project is also full of challenges at internal and external level. 

 

Domestic Challenge

 

The very first challenge is the lack of domestic consensus on the project. Initially it was welcomed by all provinces, but later on much controversial voice rose against the CPEC's distribution. The concern and grievances of small province is that province of Punjab will take benefit from CPEC.

 

Baluchistan Issue

 

·         The strong opposition came from Baluchistan, which has perceived historically disturbed relations with Pakistan's government. The sense of deprivation is due to the feeling of isolation in economic and political front by the central government. In recent, the concern of Baloch nationalist against CPEC is about the unfair distributed benefits of project and they also think that overall profit will go to Punjab. Even they abbreviate CPEC as “China Punjab Economic Corridor.”

·         Security issue is not only the problem of Baluchistan but also the major issue of the country. Pakistan is highly affected by the wave of terrorism.  Pakistan has greatly contribution on war against terrorism. China also admired the efforts of Pakistan against terrorism and requested all other countries to acknowledge the role of Pakistan against terrorism.  The Chinese Foreign Ministry’s spokesperson Gen Shuang said; 

·         Pakistan is at frontline in the global “war against terrorism” is not only opposing terrorism determinedly but also have made significant contributions and sacrificed a lot while fighting against terrorism to maintain peace and security in the region.

·         And by analyzed the situation, Pakistan arranged Civil Armed Force Wing and Special Security Division of 12,000 men to protect CPEC.

 

Indian Factor

 

CPEC being the part of the China’s vision “one belt one road” shifts the paradigm of power from west to east.  No one can deny the importance of corridor and due to its importance, the opportunity to participate in CPEC, provided equally to all South Asian countries including India too. But India is opposing this project rather than to join. There are multiple reasons behind this act by India. India says the corridor will be passing through the Gilgit Baltistan which is the disputed area and is a part of Jammu and Kashmir occupied India. PM Moodi remarked: ''The CPEC passes through a territory that we see our territory. Surely people will understand what the Indian reaction is. There needs to be some reflection and I am sorry to say that we have not seen the sign of that’’ (The Dawn, 2017, January 19).

Shanghai Cooperation Organization SCO and Pakistan

The Shanghai Cooperation Organization SCO from Shanghai Five formed by China in 2001. The background which forced for the creation later organization was that after the disintegration of USSR, the border demarcation issue between Russia and China, territorial disputes of Tajikistan, Kyrgyzstan, and Kazakhstan were unsolved ad it was the need of time to form a multilateral framework to address the issues. In 1991 Kyrgyzstan, Kazakhstan, Tajikistan, China and Russia initially formed an agreement and later in 1996, an agreement signed for military field focused on the solution of border issue named ''Shanghai Agreement’’ (Shanghai Five) latter in 2001, it added Uzbekistan and renamed itself the “Shanghai Cooperation Organization”.

SCO is world's largest club, has eight members body, in which four are nuclear powers, and two of them are permanent members of UN Security Council. SCO consist of China, Russia, with Central Republics of Kyrgyzstan, Tajikistan, Uzbekistan, and Kazakhstan. Pakistan and India has recently granted full membership in SCO. The total population of SCO countries are 3.5 billion (covers half of the world), along with combined GDP is 25% of the global GDP (Dawn, 2016). The new dimensions of SCO are encircling economic cooperation, security issue, along combating elements of extremism, terrorism, and separatism. The function of SCO is strengthening the neighboring relations and cooperation in trade, energy, politic, economy, education and culture. with two permanent headquarters; The Regional Anti-Terrorist Structure (RATS) Tashkent and second in Beijing.




SCO and Opportunities for Pakistan




Pakistan and Russia 




SCO is the platform that provides Pakistan's closeness with Russia. Since independence, Pakistan has maintained her close ties with western world. In history, Russia derived forward to Pakistan when sub-continent divided into two parts Pakistan and India. But Pakistan joined noncommunist world and became a front ally of USA. Now time has been changed, Pakistan must revise her foreign policy by linking up her defense and economic relations with CARs, Russia through the forum of SCO. It is also notable that Pakistan’s good relations with Russia would help Pakistan to get the Russian support over the Kashmir issue.




Geographical Location of Pakistan




Pakistan has blessed with unique strategic and geographic features. One of them is Gawadar sea port which is located on the gateway of strait of the Hormuz. And both China and Russia wants easiest and nearest route to access the mineral rich Africa and oil rich Middle East to meet with her energy need. Gawadar port is can do this job as an energy and trade route for China and Russia. For this purpose, Pakistan has also concluded various agreements with other SCO members to improve her trade and rail routes to join the mainland with Eurasia belt.




War against Terrorism




The South Asian region has highly effected from terrorism specially Pakistan. Russia and China acknowledge the role of Pakistan in counter terrorism. Now the emergence of ISI, the countries like Pakistan, Iran, Russia and China has great concerned about the new rising militant wave. SCO provides a forum for all members’ countries to work together against terrorism.




India-Pakistan Relation




SCO can also help to facilitate the good relationship of India-Pakistan. It can help to improve the bilateral relations between two rival states The spokesperson of Chinese Ministry of Foreign Affairs expressed the hope that India and Pakistan after their admission in SCO will follow the SCO charter and will increase their friendship on long term basis while upholding Shanghai spirit. It will be helpful to enhance the prospects of development of SCO (The Dawn, 2017, June 01).




Cooperation with other Countries




SCO can further help Pakistan to expand her trade and economic volume with Eurasian region through the comprehension engagement with other member countries.




Pakistan and Afghanistan




War and terrorism activities in Afghanistan is an alarming situation for South Asian region and despite the Muslim neighboring countries, the relations between Afghanistan and Pakistan is not cordial. Afghanistan has always blamed to Pakistan whenever any terrorist activity take place there. SCO allows them to deal with their issues under the most important Treaty of SCO that consist of the key points of Long-Term Good-Neighborliness, Friendship and Cooperation.




Challenges




SCO is the blessing opportunity for Pakistan to get maximum advantages from the region having some challenges as well.

a) We have only one friend in region that is happy with us, China. But a week before Astana meeting (where Pakistan and India granted full membership in SCO) killing of two Chinese in Quetta created awkward situation.  Chinese President Xi Jinping said at Astana that the terrorist activities in the recent times in region indicates that the battle against the three forces of extremism, separatism and terrorism proves a difficult and extensive mission and Indian media highlighted that China got anger with Pakistan on the Quetta killing.

b) The SCO forum did not provide any betterment in the relationship between India and Pakistan as it being assumed. Russia offered her help to put a way forward for good relation between India and Pakistan. But India did not show any interest.

c) The domestic issues of Pakistan also itself a big challenge, The current Pakistan government faced a lot of domestic issues, political instability, security problems and due to these circumstances Pakistan had not paid her fully attention towards regional cooperation. 

d) Afghanistan factor posed a serious challenge to fulfill the SCO treaty of Long-Term Good-Neighborliness, Friendship and Cooperation. Afghanistan always alleges Pakistan for terrorism in her country. The President of Afghanistan said after a suicide attack in Kabul; ‘Pakistan continues to host terrorist sanctuaries.’ 

Conclusions

On the occasion of China-Pakistan diplomatic relations, the Chinese ambassador Sun-Weidog resmarked that mutual benefits and assistance, shared prosperity on the basis of equality and sincerity are the foundations of Pak- china relations. This statement is the result of long historical relations of Pakistan and China when the whole world was experiencing the curse of Cold war. The era of Cold War also witnessed the ideological rift between China and USSR. Return back to Pakistan-China relationship, the initial base for strategic relationship between the two neighboring country was the Indian factor, which perceived as common threat by them. But with the passage of time this factor got disappeared due to the transformation of world and by realizing the need of time, China too adopted such diversion to reform her relations with India. China is economically rising, and also facing the challenge in form of terrorism, fundamentalism, and extremism, to tackle these hurdles, China depends upon the global cooperation. The one of the basic reason for rapprochement of China-India relations was also the part of such cooperation. But there is one thing is remained constant, the friendship between China and Pakistan from the tactical alliance to the strategic partnership. Regardless the difference in ideology, religion, culture, history, language, economic and politics, the relations between them has remained friendly, trustworthy and respectful. In international relations, there is neither permanent enemy, nor permanent friend, only interests are permanent.  In the case of China-Pakistan relations, the relations of both countries being presented as a role model and famous as all-weather, time tested friends. 

Despite the strong diplomatic and political ties of China-Pakistan, the Economic relations of both countries are not very impressive. By realizing the concern over the trade relations, the traditional China Pakistan friendship has new objectives on the way of economic content. The both countries have set up various economic frameworks. The recent economic bilateral agreement which is known as China-Pakistan Economic Corridor is another milestone of the ‘’All-weather’’ friends. The value estimated 62$million project contains network of railways, roads and pipelines that includes industrial and energy projects.

At the end, China and Pakistan is now engaged and has entered in new phase of bilateral cooperation, dealing with domestic, regional and international circumstances and on the other side confronting the challenges of terrorism, extremism and separatism. The overall cooperation in defense, economy and diplomacy is based upon the geo-strategic and geo-economic interests of both countries; this will further solidify the relationship between them.

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